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What you need to know about laying-off staff legally

15th Oct 2016
Employee Benefits, Employment Law, Human Resources, Payroll

Laying off staff means you tell them not to come into work for at least one working day. This can be used when there is a temporary downturn in work and there is not enough work for the full workforce to do. Another option is short time working when you cut employee’s working hours. It is possible to use both systems at the same time, for example, your team would work shorter hours for a few days, and then be laid off for the rest of the week. Here’s how…

Your employment contracts must expressly state that you have the right to lay-off. As long as this is stated in the contracts you can invoke that right as and when needed. However, if you have not included that in your employment contracts you will need your employees’ permission to do so. If this is the case you must obtain that permission in writing to avoid any risk of constructive dismissal and/or breach of contract claims.  We have a template for this in our HR Toolkit.

It may be that you only have to lay off a certain percentage of your staff, or a certain group. If only some employees are to be laid off, you must ensure your choice is based on business needs and isn’t unlawfully discriminatory.

Lay-offs are designed to allow organisations to cope with short term down-turns in work. Whilst there is no limit on the length of time an employee can be laid off for but where there’s no realistic prospect of work picking up again you should look at redundancy as a more permanent solution.

If an employee has received less than half a week’s pay as a result of a lay-off for four consecutive weeks or six non-consecutive weeks in a 13-week period, they can apply to you for redundancy and, where applicable, a redundancy payment. You can either meet their redundancy claim or contest it on the ground that you reasonably expect to provide at least 13 weeks’ employment without having to lay-off again within four weeks.

When an employee is laid-off they are paid as normal unless the employment contract provides for an unpaid lay-off. If the employees have no right to pay contractually then they are entitled to statutory guarantee pay for the lay-off days. The amount is based on their normal daily rate of pay up to a maximum of £26.00 per day (2016/17) for a maximum of five days in any three-month period (pro-rata for part timers).

To be entitled to guarantee pay, the employee must:

  1. Comply with your reasonable requirement to be available for work;
  2. have been employed for one month or more; and
  3. not refuse any suitable alternative work (including work that’s not in their employment contract).

However, you’re not obliged to make a statutory guarantee payment for any day on which the employee does some work for you, e.g. via short time working.

It is very important to communicate lay-off, short time working and redundancy correctly and have the policies and procedures in place to support both your employees and your managers. We would be happy to discuss how we can provide the HR advice and support that you need to ensure these systems are implemented appropriately and lawfully. If you would like to discuss how we can help you please contact us on 01473 360160.

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